Virchow Drugs Limited V. The Income Tax Officer, Ward 3(1) and Principal Chief Commissioner of Income Tax, AP and TS and Union of India, Through Ministry of Finance

WP/11247/2023

AI Insights

The case involves Virchow Drugs Limited, the successor company to Siri Drugs India Private Limited, challenging notices issued by the Income Tax Department for the assessment year 2016-17. These notices were directed at Siri Drugs India Private Limited, which had ceased to exist following its amalgamation with Virchow Drugs Limited. The petitioner argued that the notices were illegal and arbitrary as they were issued against a non-existing company. The respondents contended that the petitioner had not informed the tax authorities about the amalgamation. The court's decision was influenced by similar cases and the principle that an amalgamated company is the only legal entity post-amalgamation, rendering any proceedings against the original entities void.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 797597 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 20-09-2023
• Assessment Year: misc
• Other Referred Cases: PCIT Vs. Maruti Suzuki (India) Limited, Sky Light Hospitality LLP Vs. Assistant Commissioner of Income Tax, Spice Infotainment Ltd. Vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUNDARI R PISUPATI; GADI PRAVEEN KUMAR
• Assessee Lawyers: BOMMAREDDY GANGADHARA REDDY
• Keywords: Amalgamation; Assessment Year 2016-17; Income Escapement; Non-existing company; Writ of Mandamus
• Section: 148; 148A(d)

Judgement Text

" [ 3sB6 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE LAXMI NARAYANA ALISHETTY Between: I //s. Virchow Drugs Limited, (Transferee and Successor company to Siri Drugs lndia Private Limited), Having its Registered Office at Plot No.9 S.V. Co,Operative lndustrial Estate I.D.A. Jeedimetla, HYDERABAD-S0O 055, Rep. by its Director Sri Prasanth Nandigala. ...PETITIONER AND 1. The lncome Tax Officer, Ward 3(1), C.R. Building, lvl.G. Road VIJAYAWADA- 52O 0O2 Andhra Pradesh 2. Principal Chief Commissionerof lncome Tax, AP and TS, lncome Tax Towers A C Guards, firlasab Tank Hyderabad-500004 3. Union of lndia, Through Ministry of Finance, North Block, New Delhi-1 10001 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to pass an order or direction, especially one in the nature of WRIT OF MANDAMUS holding that the order passed by respondent u/s.14BA(d) of the Act, d1.24.03.2023 with DIN.ITBA/ASIlFl148A12022-2311051256350(1) and the notice dated 24.03.2023 issued under section 148 of the Act with DIN.ITBA/AST/S/148 112022-2311051256845(1)for the assessment year 2016-17 against SlRl DRUGS INDIA PRIVATE LIMTIED (PAN. AARCS1175J) as being illegal, arbitrary, without applicatron of mind apart from being violative of judgements of Hon'ble High Courts and Hon'ble Supreme Court, and consequently set aside the same WEDNESDAY, THE TWENTIETH DAY OF SEPTE[/BER TWO THOUSAND AND TWENTY THREE WRIT PETITION NO: 11247 OF 2023 I lA NO: 1 OF 2023 Petition under S3ction 151 CPC praying that in the circunst;rnces stated in the affidavit filed in support of the petition, the High Court ma/ be pleased to stay all further proceedirrgs pursuant to notice issued by the R:spondent, dated 24.03.2023, under s,rction 148 of the Act for the assessment vear 2016-17 with Dl N:ITBA/AST/SI 1 48 _1 12022- 2311 051 25684s( 1 ) Counsel for the Peti ioner : SRI BOMMAREDY GANGADHAFA REDDY Counsel for the Resi>ondent Nos.1 & 2 : Ms. SUNDARI R PISUI)Ai-|, SENIOR STANDING COUNSE L FOR INCOME TAX DEPARTMENIT Counsel for the Respondent No.3 : SRI GADI PRAVEEI{ KUt lAR, STANDING COUNSEL FOR C.G. The Court made the following: ORDER I I 3 ORDER: (1trt tknt tte Srr ir.rsrrr-r,P.SIM I(OSIIY/ The instant writ petition has been filed by the petitioner assailing the order dated 24.03.2023, passed by the respondent No. | /'fhe Income Tax Oflicer vide DIN & Noticc No. ITBA/AST/S/ 148A12022-231 losr256350(1), under Section 148A (d) of the Income Tax Act, 196 1 (for short 'the Act') for the assessment year 2Ol6-20L7 against Siri Drugs India Private Limited. The aforesaid company i.e. Siri Drugs Indiva Private Limited since had got merged with the petitioner's Company under the scheme of amalgamation with effect from O1.04.2015, the challenge is also to the consequence notice under Section 148 of the Act. 2. Heard Mr. Bommareddy Gangadhara Reddy, learned counsei for the petitioner, Ms. Sundari R.Pisupati, Iearned counsel for lespondent Nos. I & 2 ald Mr. Gadi Praveen THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY WRIT PETITION No.11247 of 2023 { I i- l I(urnar, lcarned Scnior Standing Counsel lor rcspondent No.3. 3. A Comp:rny Petition rvas liled befor,: this Fliqh Court vide C.P.No.4t of 2016 seeking sanction of thc s,:heme of amalgamation of Siri Drugs Inclia Priv:rte Limit,:d ,ith the petitioner's Company i.e. M/s. Virchor,r'Drugs Limited. The said comJrany pctition finally stood allou,e, l vid: rrrler dated 30.03.20 16. The High Court ir.r the coursie of alloning the company pet tion, orderecl zrpproval of the sc heme of amalgamation rvhich stood a1;proved ir.r t,re mcr:tirrg of the Board of Directors of the transf'eror Comprrny i.c. S:ri Drugs India Private Lirnited on O4.O I .2O 16, san<:tionin;3 the effect of the amalgamation from the appointerl date i.e. 01.04.2015. l.s a consequence of the apploual of the scheme by the High Court, thc transferor Comurrll i.e. Siri Drugs India Private Limited stood dissolve,-l rvit -r eficct from 01.04.2015. Tlrereafter, it stoocl merged with tlre transferee Company 1.e M/s. Virchow Drugs Limitt,d. As a consequence c f the dissolutior-r of the saLd Ct,nrpiuly, the transferor Conrpany i.e Siri Drugs Indie Private Limited 5 became non-existing. Since 01.04.2015 onwards it was only the amalgamating Company i.e. transferee Company wl-rich remained in existence along u,ith the assets and liabilities of the amalgamated Company. 4. Though Siri Drugs India Private Limited stood dissolved with effect from 01.04.2015, the respondent No.1 had issucd a notice under Section 148A(b) of the Act in the name of the said non-cxisting Company i.e. Siri Drugs India Private Limited, alleging escapement of income for the assessment year 2016-2017 to the extent of Rs.3,06,25,283 / -. 5. The petitioner entered appearance and raised objection as to the veracity ol the notice when it stands issued against the Company u,hich ceases to exist and which became non-existing since O1.04.2015. Though the objection was raised by the petitioner on issuance of notice on a non-existing Compan-y, the respondent No.1 ignoring the said fact held that it was a fit case for issuance of notice under Section 148 of the Act for the assessment year 2016- 7 201,7 . It is this proceeclit'rgs u'hich is uuder clrallc,-rge rn the present [,rlt l)ctltlon. 6. Learned c:ounsel lor tht' pctitioner t'ontcttrlc<1 that the Hon'ble Supreme Court o[ Inclia itself in one r,f t I're recent decisiorrs in ttre case of' PCIT Vs. Mantti Su:zu,ki (India) Limitedt dezLling with a sorncrvhat similar ';itu::tion held that initiatir g proceedings irnd lrarnirrg ol zts;scssment against non-existing Company (lo lr l)a n], rvhich il l.c. a stood amalgamated is impernrissible unrl<'r tht l.lt. 7 . Accordir rg to the learne cl counsel lor- t hr: pctitioner, since the Hi1;h Court itself had given tlre alrpro.ual of the scheme of amalgamation zrnd furtlrei- ordr:rcd the dissolution o.'the transferor Company i.t'. Siri Drugs India Private l-imiterl. 11() procr:eclings could had lre<:n drawn against the srrirabad. One CC to Sri 3ommaredy Gangadhara Reddy, Advocate [t)p1j\", One CC to Ms Sundari R Pisupati. Senior Standing Counse for lncome Tax Department [OPUC j One CC to Sri 3adi Praveen Kumar, Standing Counsel fcr {).G [OPUC] Two CD Copie ; o 10 Kj GJP ,g I tt HIGH COURT DATED:20/09/2023 ORDER WP.No.11247 of 2021 ALLOWING THE WP WITHOUT COSTS. t A 1* ST, 1l ,y'.?''* :I 1$ € T o \"a -Q ; [t'i 1$1 'r4 (tu "